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Newsletter #22, January 2005

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Which vintage instruments offer the best utilitarian value?

January 2005 marks the 35th anniversary of Gruhn Guitars. During these years, the market for fretted instruments has gone through tremendous change. Looking back from when I first started collecting vintage instruments in 1963, the changes are even more radical. A buyer or collector from 1963, if he could be transported in a time machine to today, would be bewildered not only by much higher prices for vintage as well as new instruments, but by the enormous selection and quality of new instruments made in the USA as well as worldwide.

In 1963 vintage instrument prices were extremely low such that it was possible to buy even the most collectible vintage acoustics for no more than the cost of an equivalent new one by the same maker. Vintage instruments seemed like a great deal, especially since those few of us who were collecting them were of the opinion that we were getting a far superior instrument for no more than, and often significantly less than, the cost of a new one. In 1963 prices of vintage acoustics had already risen significantly due to the influence of the Folk Boom that started in 1959, but those instruments had started from a point of having virtually no resale value and were only just beginning to compete with the cost of new instruments.

In 1963 vintage electric guitars were still not sought after to any significant extent and were selling for absurdly low prices. Sunburst Les Paul Standards from the late 1950s, when they could be found, usually could be purchased for about $100. Pre-CBS Fenders, 1950s Gibson electrics, old Rickenbackers and virtually any other electric guitars which we consider to be rare collectibles today were simply viewed as used guitars and frequently as obsolete. It was not until Mike Bloomfield started playing vintage electric guitars with Paul Butterfield that I began to see any demand for vintage electrics. From that point onward, however, the market for electric guitars rose rapidly as numerous musicians took up collecting and playing these instruments on stage. It was my observation that the rising popularity of rhythm & blues in the mainstream market had an enormous impact on this trend.

During the early and mid 1960s new Martin, Fender and Gibson guitars were typically sold by dealers at full retail list price. I still have vivid memories of going into the big Lyon & Healy retail store on Wabash Avenue in Chicago and seeing their limited selection of new Martins behind glass where you could not touch one without permission. Martin was backordered over two years and no dealer in town had a selection even remotely approaching what typical Martin, Fender or Gibson dealers stock today. In addition, it is worth noting that none of the major manufacturers offered nearly as large a model selection as today. Martin made only their standard line whereas today they have X series, Technology series, Standard line, Vintage line, Golden Era series, special artist endorsement guitars and custom shop models. Similarly, Gibson offered a few model acoustic guitars, no Les Paul models, and SGs only in Junior, Special, Standard and Custom. Fender offered the Stratocaster, Telecaster, Jazzmaster, Jaguar, Musicmaster, Duo-Sonic, Precision bass and Jazz bass, each in one standard color and with a few custom color options, but nowhere remotely near the variety offered in their catalog today. There are more variations of the Stratocaster alone offered at this moment than Fender had of all their models combined during the entire pre-CBS Fender era.

Regardless of price and model selection, it was always clear in the 1960s that major American manufacturers produced a clearly superior product to any lower-priced student model. There were hardly any Japanese guitars sold in the USA as early as 1963, but the first ones we saw during the 1960s were of extremely low quality such that they did not compete with premium American brands and were not yet serious competition for American makers of student instruments such as Kay, Harmony and Danelectro. While student model American guitars by these companies were better than the Japanese guitars of that era, they still were not remotely close in playability or sound to Martins, Gibsons and Fenders. Harmony and Kay made playable acoustics and electrics, but the neck dimensions, action and general playability left much to be desired. Electric Harmonys, Danelectros and Kays not only were not comparable in physical playability to Fenders or Gibsons, but they did not sound even remotely similar. The top Harmony and Kay models were fully as expensive as some lower and midline Martins, Gibsons and Fenders but offered more flash than substance. Needless to say, they have not appreciated nearly as much as the better brands.

Despite the fact that Gibson, Fender and other companies had not trademarked body shapes and neck shapes and did not appear to be enforcing any patent protection on their electronics, there simply were no close knockoffs or clones of Les Pauls, SGs, Stratocasters, Telecasters or Fender basses on the market at that time. It is particularly interesting to note that while Gibson and Gretsch both had patents on their double-coil pickups (one wonders how two companies achieved this at virtually the same time), it is clear that there was little if any enforcement since by 1963. Guild also began using humbucking pickups of their own.

Although list prices of the early and mid 1960s may appear absurdly low by today's standards, when adjusted for inflation and for the number of hours of labor it took the average American worker to save enough to buy one of these instruments, it turns out that they were frequently more expensive than equivalent new model guitars today. Additionally, it is worth noting that today there are numerous import models which feature remarkably good workmanship, excellent electronics and fine playability at remarkable bargains. Not only are many import models excellent sounding and highly playable, but many of them offer electronics so closely modeled after Fender and Gibson that they offer virtually the same type sound and feel as the American-made article.

During the 1960s, only a few people had any vision that vintage instruments would become highly collectible and I know of no one from that time period who would have even dreamed that they would achieve price levels seen today. We bought them because we were of the opinion that they played and sounded vastly superior to the new ones available at the time as well as the fact that they were relative bargains. By the time I opened my shop in January of 1970, the market was significantly different from that of 1963, but not so much as to be unrecognizable. In 1970 the most desirable vintage models were bringing somewhat more than equivalent model new ones, but not so much more as to be a radical difference. When I first opened the doors of my shop, I had a 1946 herringbone-trimmed Martin D-28 priced at $600 and a 1937 or '38 D-28 herringbone priced at $800. At that time the list price of a new D-28 was $400. My 1930s model sold relatively promptly, but I recall that it took several months for us to sell the 1946 guitar. I also recall that very clean, dot-inlaid ES-335 Gibsons from the late '50s could be had for $400, which was no more than the cost of a new one at that time. 1950s and '60s Stratocasters were also still available for no more than the cost of a new one. It was not until Eric Clapton started playing Stratocasters in late 1970 that Stratocaster began to rapidly escalate.

In 1970 Harmony and Kay still dominated the market for student instruments, but Japanese guitars were beginning to make serious inroads such that by the mid 1970s Harmony, Kay and Danelectro had folded and Japanese-made instruments had taken over the student instrument market niche. Martin, Fender and Gibson, which had made some low-end, moderately priced models throughout much of their history, largely abandoned that segment of the market to concentrate almost exclusively on mid-price and upper-end models. Models such as the Martin styles 15 and 17, Gibson's LG-0 and Fender's Musicmaster and Duo-Sonic went by the wayside during the mid 1970s. Later during the '70s, Korean instruments began to compete with the Japanese. By 1979 Gibson had switched Epiphone production from Japan to Korea. The Japanese economy had strengthened to a point where Japanese labor and manufacturing costs were no longer competitive with other Asian countries. As the years progressed the Koreans found themselves competing with Indonesian factories and more recently with China.

Through the years, more makers entered the marketplace. Back when I first opened the doors to my shop there were so few independent luthiers that I used to joke that if I lost a finger on my left hand for each one of them who was good enough to compete with the major American factories such as Martin, Fender, Gibson, Guild and Gretsch, that I would still have as many functional fingers on my left hand as Django Reinhardt and I could still play a tune, although I certainly didn't think I would be able to duplicate Django's musicianship. Obviously, this same statement would seem absurd today.

Over the years as vintage instrument prices have escalated fewer and fewer true vintage models by major makers have been available at prices comparable to a reasonably equivalent new model by the same maker. When I opened the doors to my shop in 1970, a pre-World War II Martin dreadnought, a Gibson Les Paul model of the 1950s, a Fender Broadcaster or an early-1950s black pickguard Telecaster cost more money than a similar-looking new instrument, but few other guitar models would fit in that category. Flat-head Gibson Mastertone banjos and pre-World War II F-5 Gibson mandolins sold for more during the early 1970s than new ones, but virtually no other mandolins did. Early model Vega, Bacon & Day, Paramount and a few other model banjos were collectible. However, since these companies were either out of business or no longer offered anything even remotely similar, there was no option to compare the "bang for the buck" of a new versus vintage instrument of the same design. Even today, many beautiful tenor and plectrum four-string banjos and open-back, 5-string, non-Gibson banjos are readily available for less than the cost of a similarly ornamented new one.

I am frequently asked which vintage models buyers can purchase today which offer the best value from a purely utilitarian point of view, especially when compared to prices of equivalent new instruments. While I have stated many times in the past that I am of the opinion that this is a "golden age" of guitar making in which there are more good makers than at any time previous in the history of the instrument, I am still firmly of the opinion that the finest acoustic steel-string guitars of the 1920s and '30s and the best electric guitars of the 1950s through early 1960s are the true "golden era" classics which have a tone and playability that remains unsurpassed. That being said, however, I will also readily admit that if one is playing either an acoustic or electric guitar on stage through modern microphones and amplification systems, the new guitars available at this moment perform extremely well, such that it would be difficult for a member of the audience to tell the difference. Although list prices are much higher today than in the 1960s or early 1970s, no one I know of pays retail list when buying today. Discounting is so widespread that many dealers find it difficult to make a good profit margin. From the player's point of view this is not a problem, since currently it is possible to buy a fine new utility instrument suitable for professional use on stage or in the studio for fewer hours of labor than at any time in the past.

In looking at specific makes and models to offer recommendations for which vintage models are currently available at no more money than the cost of a similar new one by the same maker, I am hard pressed to come up with any Martin steel-string acoustic models of the 1920s and '30s which currently can be purchased for no more than the cost of a similar new one if one takes Brazilian rosewood out of the equation. Martin's new mahogany and Indian rosewood guitars are of excellent quality and offer what I consider to be a very good value. The company has, however, recently very dramatically raised prices on any instrument manufactured with Brazilian rosewood. It is worth noting, however, that Brazilian rosewood is on Appendix I of the CITES Treaty (Convention on International Trade in Endangered Species). As of June 11, 1992, importation of this wood has not been legal and today there is virtually no Brazilian rosewood left which can certifiably be confirmed as having been cut before that date. As a result, Martin has made the decision to dramatically raise their price on instruments made utilizing the very small amount of certifiable pre-CITES Brazilian rosewood they still have in stock. While it is my opinion that the new limited-edition Brazilian rosewood Martins are now priced at a figure which is no longer competitive, I consider the new Indian rosewood guitars in their line to be of fine quality. I am especially pleased with Golden Era and other models offered by Martin with Adirondack spruce tops. Just as Antonio Torres demonstrated in the late 1800s by producing a fine guitar with a fine quality spruce top with paper mache back and sides to show that it was the top that was the most significant component in tone, it is my opinion that Adirondack spruce, proper bracing, hide glue and proper finishing techniques hold the secret to the "prewar sound" more so than Brazilian rosewood. Today, even a prewar Style 17 Martin with a small body, mahogany top and no bindings costs about the same as a new Golden Era D-18 at today's discounted "street price." Martin 0 and 00 size guitars from the 1950s and '60s are still available at prices frequently less than a new Golden Era series mahogany Martin. However, the guitars of the '50s and '60s are not only not equivalent to the pre-World War II models, but in many cases do not sound as good as new mahogany Golden Era series instruments. While there are some people who would regard instruments of the 1970s as collectible due to some nostalgia appeal because they are now 30-plus years of age, it has long been my opinion that the 1970s mark a low point in manufacturing quality for virtually all American guitar makers. While I fully acknowledge that there are buyers who will pay a premium for the nostalgia appeal of these instruments, it is my opinion that instruments of this time period do not offer better utilitarian value for the price than today's current models.

Similar observations can be made in regard to Gibson acoustic flat top guitars. Pre-World War II Gibson flat tops cost significantly more money than equivalent new ones. Even the lowest-priced early models, such as the L-00 which cost under $30 when new during the height of the Depression, today will sell for over $2,500 for a good example. Prewar Gibson dreadnoughts are much more expensive than similar-design new Gibsons. Gibson flat tops of the 1950s and '60s are currently selling for more than equivalent recent ones, but I still regard the prewar ones as the true "Golden Era" pieces. In the case of Gibson archtop guitars, however, models such as the L-50, L-4, L-7, L-10 and L-12 are still readily available for less money than any new Gibson archtop acoustics, and non-cutaway, top-line archtop models such as the Gibson L-5 and Super 400 are still available for prices similar to the going rate for new L-5s and Super 400s. However, it should be noted that Gibson's production of new archtops is extremely limited. Early-model Gibson cutaway archtops still command more money than a new one, but it is worth noting that prices of many vintage archtop guitars are actually lower today than ten years ago when that segment of the market peaked. It is possible today to buy original D'Angelico archtops for no more money than new instruments made by Benedetto, Monteleone and a few other very highly regarded makers.

When looking at vintage electric guitars with the goal of finding models from the 1950s through early '60s which can be had for no more money than an equivalent new one, it is my conclusion that it is also not possible to come up with anything from the pre-CBS Fender era which can today be purchased for less money than a similar new one. Telecasters, Stratocasters, Precision basses and Jazz basses of the pre-CBS era all cost more even than new Custom Shop Fenders. Lower-end models such as Musicmasters and Duo-Sonics are much less expensive than Teles or Strats, but are also not equivalent in playability or sound. Jazzmasters and Jaguars, which cost more money new than Teles and Strats, are today much cheaper than the same-age Strats or Teles, but they still cost more money than similar non-Custom Shop new ones.

Much the same can be said for Gibson electric guitars of the 1950s through the mid 1960s. Virtually all Gibson vintage electrics currently cost significantly more money than similar-design new ones. Likewise, Gibson electric guitars of the early 1970s, while they may have nostalgia appeal such that they frequently command more money than similar-design recent guitars, which in my opinion may be better, are not in my opinion offering particularly good "bang for the buck" compared to recent issue ones. I view the electric Gibson guitars of the 1970s, however, as being far superior in this regard than the Gibson acoustics of that same time. I am very firmly of the opinion that Gibson acoustic flat top guitars of this period are not only the worst in the history of the company, but that due to design changes and changes in manufacturing techniques during this period, the acoustic Gibsons of the 1970s are in most cases simply of such poor quality as not to merit serious consideration either as utility tools or investments.

Gretsch guitars of the 1950s are, in my opinion, not structurally as well-designed as the Gibsons and Fenders of that same time. However, the Chet Atkins models as well as White Falcons, White Penguins, Duo Jets and a few other models are quite sought after due to their visual appeal and their unique sound. These instruments command higher prices than new Gretsches. However, it should be noted that the new ones are made in Japan and are structurally quite different from the originals. Many Gretsch models of the early 1960s are still readily available at prices no higher than similar new ones and a wide variety Gretsches of the mid 1960s onward are very readily available at prices which I view as providing good utilitarian value.

Original 1950s and early 1960s Rickenbackers are extremely rare, such that if prices were simply determined by rarity, as they are with coins and stamps and some other collectibles, one would expect these instruments to command far more money than they do today. Rickenbackers, however, have been viewed as niche-market instruments perhaps more so than other major brand, such that they have not achieved nearly as widespread recognition nor reached the price levels of Fenders and Gibsons. Mid- and late-'60s Rickenbackers are still available in most models at prices not especially higher than the vintage reissue Rickenbackers, but still more than most standard-line new Ricks. Used Rickenbackers of the 1970s are quite readily available for less than the cost of new ones, but these instruments are not equivalent to those of the '60s.

When instrument values are viewed from an investment viewpoint rather than simply as utilitarian tools the picture changes very dramatically. Some of the most expensive vintage instruments, such as late-1950s sunburst Gibson Les Paul Standards, Flying Vs and Explorers, Fender pre-CBS Telecasters, Stratocasters Precision basses and Jazz basses, Martin pre-World War II dreadnoughts, Gibson pre-World War II acoustic flat top models, and pre-World War II Gibson F-5 mandolins and Mastertone flat-head banjos, while they may be exceedingly expensive today, have gone up in price so dramatically over the years that from an investment point of view they seem far better than money in the bank or in almost any mutual fund. I can vividly remember when I started out in the mid 1960s being able to buy sunburst Les Pauls for $100 and 1950s Stratocasters for $75 to $100 even for fine custom color examples. While it is true that there were times in the past when one could buy individual stocks such as Microsoft for well under $10 a share, which today would have gone up in value every bit as dramatically or more, the stock market as a whole and mutual funds have not performed any better than, and in most cases not as well as, the vintage guitar market overall.

Hindsight is 20/20, but predictions for the future tend to be far more fuzzy. If one had bought some of the most sought-after and highest-priced vintage flat-top acoustics, solidbody electrics, banjos and mandolins five years ago and paid top dollar retail at that time, it would have been a great investment, since many of these pieces have as much as tripled in value in the past five years. I must confess, however, that in the year 2000 I did not anticipate that they would do so, nor am I confident that they will continue this trend to triple in price between now and the year 2010. It is, however, clear that these models are very highly sought-after at the present time and appear to be still escalating in value rapidly. Whenever a fine sunburst Les Paul Standard of the late '50s, Loar-signed F-5, one-piece flange prewar flat-head Gibson Mastertone, prewar D-28 or D-45, black-pickguard early-'50s Telecaster or Broadcaster, or clean original sunburst or custom color Stratocaster is placed on the market today, they seem to set off a feeding frenzy and sometimes a bidding war. Back in the year 2000 it was my opinion that many of these pieces had peaked such that I felt that it was difficult to see how an investor could get a great return buying them at the retail figures of that time, but I was wrong. As a businessman, I buy instruments in order to sell them in today's market. If I can achieve a reasonable profit margin I sell them and reinvest the money in more inventory. If prices continue to escalate I at least have the satisfaction that the money I have reinvested has been put in instruments which also are appreciating. As long as I continue the cycle, I can support myself.

While it is very probable that some of the most expensive and highly sought-after vintage models will continue to be great investments, the fact remains that these instruments are currently in a price bracket which puts them out of reach of many musicians wanting to play them and equally out of reach of many people looking for instruments which may currently be affordable and which have the potential to be good investments. It is my opinion that there are numerous models which are quite readily available today at prices which place them well within the reach of most musicians and potential investors. Pre-World War II 000-size Martins have escalated significantly in value, but are still nowhere near as expensive as the dreadnoughts in spite of the fact that they offer exactly the same quality materials and workmanship and have a sound which is extremely versatile such that for many players they actually are better-suited for their musician techniques than a dreadnought. Martin 0 and 00-size guitars are far less expensive than the 000s and still offer the same quality materials and workmanship and superb sound for many musical styles. These instruments are far more rare than many collectors and investors realize and, in my opinion, continue to be "sleepers" which are likely to escalate dramatically in value in coming years. Martin guitars of the 1950s and '60s, including Brazilian rosewood dreadnoughts made throughout the 1960s, are likely to be very good investments especially in view of the fact that stocks of Brazilian rosewood to manufacture new guitars are running out.

I still view pre-World War II Gibson flat top guitars as good investments. I particularly expect that some of the smaller size flat top Gibsons of that period such as L-00s and L-1s will continue to escalate significantly in price. Clean original examples are remarkably scarce but still tend to be quite affordable such that there is significant room for growth. Pre-World War II Gibson mandolins, with the exception of scroll models with f holes such as the F-5 and the extremely rare F-7, F-10 and F-12, are still available for less than the cost of similar-design new Gibsons and no more than, and frequently less than, similar copies and modern mandolins by other makers. I view prewar Gibson A models as well as the F-2 and F-4 as being fine instruments at highly affordable prices which offer the added bonus of terrific investment potential. Martin and Lyon & Healy prewar mandolins are very good values and can be purchased today for less than it would cost to make a modern replica, but there are no new equivalent models being made by the same manufacturers.

I am hard pressed to come up with any suggestions for vintage electric guitars which I consider to be real "sleepers" such that they are priced low today and are likely to dramatically escalate in the near future. I do, however, feel that pre-CBS Fender guitars as well as Gibson, Gretsch and Rickenbacker electrics of the '50s through mid '60s will continue to be excellent investments. I am less certain of the investment potential of electric guitars of the 1970s, some of which are selling today for more money than the cost of similar new ones in spite of the fact that, in my opinion, most of the ones from this time period are not as good as utility tools as many of those being made today by the same manufacturers.

While some amazingly good sounding instruments with excellent workmanship are being made by overseas manufacturers in Japan, Korea, Indonesia and increasingly in China, I do not expect these instruments to significantly impact the market for vintage American models. The fact remains, however, that with modern computer numerical-controlled equipment it is possible to make a guitar in China or virtually anywhere else with the same dimensions and remarkably similar playability and sound to one manufactured in the USA. While baby boomers may associate "Made in Japan" as inferior to "Made in USA" today's teenagers do not necessarily think in these terms. As Chinese quality continues to progress by leaps and bounds these instruments are increasingly being considered as viable alternatives not only for students but also for professional players. We live in interesting times.

George Gruhn